I went to lunch with some real-estate tycoons.  I was asked to pick up one of these guys.  His vision was no longer good enough to drive.

I arrived at his small messy town house and felt bad for him.  He is well in his 60′s worth millions of dollars and had nothing of importance.  I feel really bad for saying this but I realized that this is not the guy I want to be.  Life is about happiness, health, and friends and family.  Make these things your priority cause really none of us want to be the richest person with the poorest soul.

“Happiness resides not in posessions and not in gold; the feeling of happiness dwells in the soul.”
Democritus

There’s only one thing that can guarantee our failure, and that’s if we quit.– Craig Breedlove.

You know I meet a lot of people who think I am “successful.” To me the word “successful” is such a relative term.  Some people think because you have you owe them something or you should buy them something.  Get me this, get me that…..And to that I say good luck.  These people don’t realize that if you want anything in Business or in Life you have to GIVE.  To be successful in Business you have to give something of value (or perceived value)to others…..bring value and you will gain capital.  In Life much is the same if you give to the right people they will give back 10 fold..some people don’t give back and those people only make a short-term hustle.  If you approach things with the attitude of how may I serve instead of how may I be severed you will reap much more out of life and business.

“It is one of the beautiful compensations of this life that no man can sincerely try to help another without helping himself… Serve and thou shall be served.” ~ Ralph Waldo Emerson

I was asked to write an article explaining the basics of stock options.  Good thing they just asked for the basics because options can be very complicated.

Two basic types of stock options:

1. Calls - This is a right to buy a stock at by a certain date for a certain price.  For example, I have personally bought some calls on PVX (NYSE).  Why?  I belive that PVX is a prime take over target and think that because it is an income trust and has not stated any plans to convert…a take over is very likely sometime before the end of the year….I have bet June.  So why not just buy the shares?  Well with options I can have unlimited upside and limited down side.  I can also buy lots more options then shares.  So I looked up the option chain and decided to get a quote on the PVX options for June.

I purchased the following:

PVX C 19JUN10 7.5

So this means I have the right to buy shares of PVX for $7.50 anytime before June 19, 2010.  I can excercise this option (pay $7.5 per share) or I can sell this option.  Lets say I buy 500 contracts (50000 shares), and the price of provident goes up to $9.50 cents per share.  If I excercise my options I can make $100K ($2 on 50,000 shares, not including commissions).  Let’s say I am wrong and don’t do anything and the option expires, I only lose the cost of to buy the option.  So options generally have unlimited upside but limited downside.  There are many more sophisticated things I can explain but this is the general idea behind call options.

2. Puts – This is a right to sell a stock at a certain date for a certain price.  So if I belive a stock is going down in three months I would buy a put option, same thing as a call except it gives me the right to sell at a certain price before a certain time.

Hope this article isn’t too confusing and explains the general premise.  Let me know if you have further questions or want more clarification.  Playing options follows my philosophy of betting big when your fairly sure.  I think some Texan said “go big or go home…”

Douglas MacArthur:

“There is no security on this earth. Only opportunity.”

Technology – Being a guy who owned his first computer in 1981 (a TI 99) I am baffled by how far technology has come and how fast it’s changing. 

Okay now this computer is dating me.  I do somewhat feel old when it comes to technology.  There was a time when I was up to date with the latest and greatest, now I am barely keeping up.  Perhaps age is all in the mind….Youth perhaps is attempting to keep up and the pursuit of continued  learning. 

Now Twitter, wow.  I didn’t get it at first but man you can learn so much from following some smart people.  Also you have to give something to get something (share your knowledge too).

You can teach a student a lesson for a day; but if you can teach him to learn by creating curiosity, he will continue the learning process as long as he lives.  ~Clay P. Bedford

So I am quite disappointed with myself.  I have been paying 30% withholding tax on my US dividends for quite a while.  Today I realized that there was something I could do about this.  Apparently I can fill out a form called a W-8BEN, and have my withholding tax reduced.  Now that I have discovered this I wanted to share.  Do your research on any fees you might have to pay, there’s usually a way to either reduce your fees.

“A penny saved is a
dollar earned.”
B. Franklin

I guess I should put up a disclaimer.  The information below is strictly based on my opinion of the subject matter.  You should consult a legal professional and / or a financial professional. 

There are a couple of things you need to understand before setting up a Canadian Corporation.

1. The basics of Corporations and Liabilities:  One of the major reasons to set up a corporation is to reduce your legal liability.  A corporation is a separate legal entity from you (Course in this market to get credit they will make you personally guarantee the loan).  Unless you personally guarantee a loan your personal assets are separated from your corporations.  So if I were to sue you I can not take your home unless you lease it to your corp.

2. Tax – As a separate entity corporate tax entity the corporation falls under different tax implications.  Small Business Corporate rates offer some tax advantages.  Also, collecting GST helps you with cash flow.

3. Costs – It is not free to run a corporation.  You will have to pay legal fees to incorporate a company.  Accounting fees for book-keeping and corp filing (wouldn’t recommend you do this yourself, I will explain in a later article).  Usually bank fees, cheques, interest rates for corporations are higher than personal accounts. 

Basics of setting up a corporation:

1. Have a lawyer incorporate your company or use a para-legal

2. Get a corporate tax number from Revenue Canada, and a GST number

3. Set up a corporate bank account

4. Hire an accountant

Ahh…so much administration..but there are definately benefits.

“Corporations cannot commit treason, or be outlawed or excommunicated, for they have no souls. “
Harold Coffin

Everything you decide to do or not do, forgoes another opportunity.  The best illustration of this is the following triangle:

This triangle illustrates that if you cut your time, you’ll have to give up either cost or quality.  Or if you reduce your costs you will have to compromise your time or quality etc…

So basically when you decide to do anything realize what you are compromising in order to do it.  ie.  I am going to spend my time sitting on the couch watching tv, instead I could be out running and getting healthier.

“When one door closes another door opens, but we so often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.”
- Alexander Graham Bell -

So if you are to invest in anything determine the risk.  What is the worst case scenario?  What is the best case scenario?  The theory goes the higher your risk the higher the potential reward.  If ever you find an investment that is low risk and has high return  jump on the opportunity (that is assuming you have done other due diligence).

The theory that the higher the risk the higher the potential return is… well some what true in traditional investments. 

The risk spectrum generally follows this for common investments

1. Stocks

2. Bonds

3. T-Bills

4. GICs

The above is just a general guideline.  Sometimes it can be wrong.  ie. Let’s say GICs return 1% per year, and inflation (the cost of goods going up) is at 2% your actually loosing money investing in GICs (maybe loosing is the wrong word, but your money can buy you a lot less today).

Risk is a fundamental part of success.  You must take risks to succeed.  However take educated risks, and if you “fail” learn from your “failures.”  Note “fail” and “failure” are in quotes, why?  I don’t believe failure exists as long as you learn something from it.  To me true failure is doing the same thing over and over and not learning.

In Honor of Canada’s win at the Olympics:

“ll always miss 100% of the shots you don’t take.”  ~Wayne Gretzky